RobustWealth (Lambertville) a fintech startup we profiled here, was acquired by Principal Financial Group (Des Moines, Iowa) for an undisclosed amount. Principal completed its acquisition of RobustWealth on July 2, 2018
In an interview with RobustWealth founder Mike Kerins last month, NJTechWeekly.com learned that the company would be staying in New Jersey and hiring here. Financial details were not disclosed.
“We’d been working with Principal for over eight months, and it was a great relationship. It’s kind of like dating. Along the way we got to know each other really well, and it made a lot of sense for us to partner even deeper,” Kerins told us.
The startup had been working to integrate RobustWealth’s robo solution with Principal’s investment products and was coming up to a product launch when serious discussions ensued. “They began to look at it as an opportunity for them to get into the digital advice space,” he said. “Culturally, we are a great fit, and the two organizations look to provide solutions to clients in the same way.”
RobustWealth is staying in Lambertville, said Kerins. “We have just booked another 9,000 square feet [an addition to 8,000 square feet in existing space] in Lambertville which we are building out. We are trying to hire one employee a week until the end of the year, so we are expanding here.”
For their part, Principal Financial Group wants “us to maintain our startup culture, the ability to pivot quickly, and launch products fast. The management team will remain the same,” Kerins explained.
Being acquired offers RobustWealth a number of benefits, too. “This will allow us to develop a better product," Kerins said. “Our group will get to connect with Principal’s solutions, such as 401Ks, annuities and mutual funds, which are things we don’t currently have… Also, rather than spending a lot of time raising capital, now I can focus on the products and the company,”
“Plus, the sale gives a lot of certainty to the employees, he added. “There are some benefits to being part of a big company.” Kerins told his employees “that they get all the benefits of being in a startup including doing cool stuff and wearing jeans and a T-shirt to work, but also getting benefits like a great 401K, certainty around funding, job security and such.”
“Having a big company behind RobustWealth will allow us to complete our mission of having a complete robotized platform faster," Kerins noted. “The mission is the same, but with money to hire people, we can accomplish it faster and better now.”
Kerins had nothing but praise for the VCs who had invested in RobustWealth from the start. “Waldon [Venture Capital] is a great firm and Larry [Marcus] has become a good friend. They’ve been extremely helpful over this journey and I’m grateful to have had them support us,” he said.
According to an article in Investment News, RobustWealth will remain open architecture, offering investment products from other providers to advisers outside Principal, and the company is still actively looking to add more custodians to the platform.
When asked why Principal is taking this approach instead of making RobustWealth proprietary, Executive Vice President and Chief Investment Officer Tim Dunbar said “the company realized an opportunity to invest in a relatively early-stage company and develop a unique product” the article continued.
RobustWealth also provides Principal an inroad to the Registered Investment Advisor, investment banking divisions of larger banks and community banks market, which Principal manages a combined $8.9 trillion, the article stated.
"We would hope to provide a lot of our investment solutions," Dunbar also said in the article. "We really want to continue to help advisers grow, and that's part of it."
"More than anything we share a common vision for where we think digital advice should go," he added.